Current capabilities and Differentiation in 2015 and BeyondJoseph DeLisle IS714December 12, 2011

Discover is not just a payment network• But a bank holding company• Has relationships with customers not just merchants and banks

Traditional Card Network- No relationship with cardholder

Looking to the future…Leverage Consumer Data-credit and purchase history…To offer revenue maximizing bank products through newly acquired student loan corporation and current savings and loan products

Discover has direct relationships with cardholders in addition to providing the payment network

Core Capability 2015 and beyond: Creating deep relationships with cardholdersWith a network roughly 2% the size of Visa and Mastercard, Discover must increase the revenue per cardholder.

People- Cardholders and Discover’s merchant network will continue to supply Discover with consumer purchasing data and Discover personnel will leverage that to deepen relationships

Governance- Discover must adhere to governmental and industry consumer standards to protect consumer privacy and to combat fraud. In addition it should use the data collected to help shield itself from excessive bad debt and charge-offs

Technology- Discover should leverage its online presence which gives it a competitive advantage over “brick and mortar” banks. Discover’s embrace of technology and a digital rather than physical footprint can allow it to price more competitively and expand its network

Process- Discover should analyze the large amounts of consumer behavior and credit history data to target cardholders with “traditional bank” products like CDs , savings accounts, personal and student loans and mortgages